Shares of New York-listed crypto companies declined on Monday as bitcoin dropped following its brief surge above the $70,000 level for the first time since mid-June. The market pullback nullified earlier gains, sparked by optimism from Republican presidential candidate Donald Trump's supportive speech on cryptocurrencies, which had initially boosted stock prices. Crypto exchange Coinbase's shares decreased by 1.5% after reaching a high of 5%. Mining companies Bitfarms, Riot Platforms, and CleanSpark also saw declines ranging from 2.2% to 4% after earlier increases. The cryptocurrency's volatility frequently leads to sell-offs after significant milestones as investors secure profits. Despite this, the industry welcomed Trump's pledge for more favorable regulations.
Bernstein analysts suggested in a note that any investment strategy leading up to the U.S. election should involve a higher allocation to bitcoin and related stocks. Trump has positioned himself as the pro-bitcoin candidate ahead of the November election, and his potential return could significantly benefit the industry, which has often criticized the excessive oversight and hostile regulatory climate under President Joe Biden. However, Securities and Exchange Commission Chair Gary Gensler, the Biden administration's chief enforcer for crypto regulations, has warned investors about the volatile and speculative nature of cryptocurrencies like bitcoin. Trump announced on Saturday that he would dismiss Gensler immediately upon taking office and plans to establish a national 'stockpile' of bitcoin using the cryptocurrency currently held by the U.S. government, mostly from law enforcement seizures. Despite these developments, some cautioned against excessive optimism.
CoinCorner CEO Danny Scott noted that while the creation of a U.S. bitcoin strategic reserve is a significant milestone, it hinges on Trump's victory. Globally, sentiment towards bitcoin has been remarkably positive this year, setting the stage for what many anticipate to be the next bull run in 2024-25. Cryptocurrencies have rapidly transitioned from the periphery of the financial world to the mainstream, aided by institutional investor support and the approval of exchange-traded funds linked to the spot prices of bitcoin and ether.
